India’s Sensex Index Jumps Most in Month on Economic Outlook

Feb. 27 (Bloomberg) -- Indian stocks advanced the most in a
month after the goverment’s economic survey said growth is
recovering. Industrial and energy stocks gained.

The S&P BSE Sensex index rose 0.7 percent to 19,152.41 at
the close, the sharpest gain since Jan. 25, and volumes were 23
percent more than the 30-day average. Larsen & Toubro Ltd., the
country’s biggest engineering company, climbed the most in five
months. Reliance Industries Ltd., owner of the world’s largest
refining complex, jumped 1 percent. Cigarette maker ITC Ltd. had
the steepest gain in almost a month amid report it plans to
raise prices.

The downturn in Asia’s third-largest economy may be over
and the recent policy measures aimed at bolstering investment
will yield faster growth, the survey said. Finance Minister
Palaniappan Chidambaram, due to present the budget tomorrow,
faces the task of narrowing the widest fiscal gap in major
emerging nations to boost the central bank’s scope to reduce
interest rates and avert a ratings downgrade.

“The FM knows India can’t afford a ratings downgrade and
therefore we expect fiscal numbers in the budget to come out
well, which the markets will like,” Mehraboon Jamshed Irani,
principal and head of private client group at Nirmal Bang
Securities in Mumbai, told Bloomberg TV India today.

The government will probably contain the budget deficit at
about 5.3 percent of gross domestic product this fiscal year,
the survey said. Chidambaram, presenting the government’s last
full budget ahead of a general election due by 2014, has vowed
to pare the fiscal gap to 4.8 percent of GDP in 2013-2014, from
5.3 percent this year.

The Sensex has fallen 4.7 percent from a two-year high set
on Jan. 25 as net incomes at 43 percent of the 30 index members
missed estimates in the December quarter, up from 40 percent in
the previous two quarters, data compiled by Bloomberg show. Net
outflows from mutual funds for eighth straight months through
January contributed to the weakness in share prices.

The government has stepped up efforts to revive an economy
growing at the weakest pace in a decade and cool inflation of
almost 7 percent under policy changes since September. GDP may
climb 6.1 percent to 6.7 percent in the year ending March 2014,
from an estimated 5 percent in 2012-2013, the survey said. The
expansion this fiscal year would be the slowest since 2002-2003.

The policy measures have prompted overseas funds to buy a
net $8.3 billion of local equities this year, a record for the
period, data compiled by Bloomberg show. They purchased $24.5
billion worth of stocks last year, the highest among 10 Asian
markets tracked by Bloomberg, excluding China.